The Finance Ministry on Saturday notified 100 per cent foreign direct investment (FDI) in the insurance sector. However, it will be capped at 20 per cent for Life Insurance Corporation of India (LIC).
According to a notification, the aggregate holdings by foreign investors, including portfolio investors, of equity shares of an Indian Insurance Company are permitted up to 100 per cent of the paid-up equity capital of such an Indian Insurance Company. It will be allowed on the automatic route, subject to approval and verification by the Insurance Regulatory and Development Authority of India.
Conditions on leadership and governance
“In an Indian Insurance Company having foreign investment, at least one among the Chairperson of its Board, its Managing Director and its Chief Executive Officer, shall be Resident Indian Citizens,” it said. Further, the foreign equity investment cap of 100 per cent will apply on the same terms to insurance brokers, re-insurance brokers, insurance consultants, corporate agents, third party administrators, Surveyors and Loss Assessors, managing general agents, insurance repositories and such other entities, as may be notified by the Insurance Regulatory and Development Authority of India from time to time.
Automatic route with regulatory oversight
FDI proposals will be allowed under the automatic route, subject to verification by the IRDAI. The foreign investment in insurance intermediaries shall be governed by the Indian Insurance Companies (Foreign Investment) Rules, 2015. If the intermediary is like a bank whose primary business is outside the insurance sector and is permitted by the IRDAI to function as an insurance intermediary, the foreign equity investment caps applicable in that sector shall continue to apply. It will be subject to the condition that the revenues of such entities from their primary (i.e., noninsurance-related) business must remain above 50 per cent of their total revenues in any financial year.
Reforms follow amendment to insurance laws
In December 2025, Parliament passed the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025, which brought key changes to the insurance framework. The legislation amended three major laws governing the sector — the Insurance Act, 1938, the Life Insurance Corporation Act, 1956, and the Insurance Regulatory and Development Authority Act, 1999.
Published on May 2, 2026